1. A stock has had returns of -26 percent, 6 percent, 34 percent, -5 percent, 28 percent, and 19 percent over the last six years. Required: What are the arithmetic and geometric returns for the stock? (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).) Arithmetic average return % Geometric average return % 1. You’ve observed the following returns on Doyscher Corporation’s stock over the past five years: –12 percent, 21 percent, 27 percent, 6 percent, and 17 percent. The average inflation rate over this period was 3.2 percent and the average T-bill rate over the period was 4.3 percent. Requirement 1: What was the average real risk-free rate over this time period? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Average real risk-free rate % Requirement 2: What was the average real risk premium? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Average real risk premium % 1. Suppose you bought a bond with a coupon rate of 7.5 percent one year ago for $941. The bond sells for $949 today. Required: (a) Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? Total dollar return $ (b) What was your total nominal rate of return on this investment over the past year? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Total nominal rate of return % (c) If the inflation rate last year was 4 percent, what was your total real rate of return on this investment? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Total real rate of return % 1. Automatic Transmissions, Inc., has the following estimates for its new gear assembly project: price = $860 per unit; variable cost = $320 per unit; fixed costs = $3.4 million; quantity = 60,000 units. Suppose the company believes all of its estimates are accurate only to within ± 15 percent. Required: What values should the company use for the four variables given here when it performs its best-case and worst-case scenario analysis? (Do not round intermediate calculations. Enter your answers in dollars, not millions of dollars. Round your answers to the nearest whole dollar amount (e.g.,1,234,567).) Scenario Unit Sales Unit Price Unit Variable Cost Fixed Costs Base case 60,000 $ 860 $ 320 $ 3,400,000 Best case Worst case 1. Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $1,860,000. The fixed asset falls into the three-year MACRS class (MACRS Table). The project is estimated to generate $1,950,000 in annual sales, with costs of $1,060,000. The project requires an initial investment in net working capital of $150,000, and the fixed asset will have a market value of $175,000 at the end of the project. Assume that the tax rate is 35 percent and the required return on the project is 14 percent. Requirement 1: What is the net cash flow of the project for the following years? (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Enter your answers in dollars, not millions of dollars (e.g., 1,234,567). Round your answers to 2 decimal places (e.g., 32.16).) Year Cash Flow 0 $ 1 2 3 Requirement 2: What is the NPV of the project? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Enter your answer in dollars, not millions of dollars (e.g., 1,234,567). Round your answer to 2 decimal places (e.g., 32.16).) NPV $ 1. A proposed new investment has projected sales of $750,000. Variable costs are 55 percent of sales, and fixed costs are $182,500; depreciation is $86,000. Assume a tax rate of 35 percent. Required: What is the projected net income? (Do not round intermediate calculations.) Net income $ 1. Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$365,000 –$40,000 1 38,000 20,300 2 47,000 15,200 3 62,000 14,100 4 455,000 11,200 The required return on these investments is 13 percent. Required: (a) What is the payback period for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) Payback period Project A years Project B years (b) What is the NPV for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g.,32.16).) Net present value Project A $ Project B $ (c) What is the IRR for each project? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Internal rate of return Project A % Project B % (d) What is the profitability index for each project? (Do not round intermediate calculations. Round your answers to 3 decimal places (e.g., 32.161).) Profitability index Project A Project B (e) Based on your answers in (a) through (d), which project will you finally choose? (Click to select)Project AProject B